WTI futures show 3% pullback from Wednesday's peak at $79.37,tether login settling near $78.50 during European trading hours.
EIA reports eighth straight weekly inventory drawdown, reaching April 2022 levels with six-year seasonal lows.
Expanded US sanctions on Russian energy infrastructure create logistical challenges for global crude flows.
The energy markets witnessed notable price action as WTI crude futures retreated from recent highs, currently hovering near $78.50 per barrel during Thursday's European session. This follows a 3% surge in the previous trading window that pushed prices to their highest level since mid-2024.
Market analysts point to conflicting fundamental drivers behind the price movement. The latest EIA weekly petroleum status report revealed continued inventory depletion, marking the longest streak of consecutive drawdowns since 2021. Commercial stockpiles now stand at their leanest seasonal point in six years, creating underlying support for prices.
Geopolitical factors added complexity to the supply equation this week. The US Treasury Department implemented additional measures targeting Russian energy exports, including sanctions on specific tanker operators and production facilities. These restrictions have forced traditional buyers of Russian crude to secure alternative shipments, contributing to increased freight costs and regional supply chain adjustments.
Contrasting this tight physical market, the EIA's latest monthly outlook introduced bearish elements to the price equation. Their revised projections anticipate global production capacity growth outpacing demand through 2026, with particular emphasis on non-OPEC supply expansions. The agency trimmed its 2025 consumption forecast by 200,000 barrels per day, reflecting slower-than-expected economic recovery patterns.
Industry observers note divergent views among market participants. While near-term supply constraints support prices, the forward curve continues to reflect expectations of improved production discipline from OPEC+ members. Energy consultancy Commodity Context suggests the producer alliance will likely maintain current output restrictions despite recent price strength, with their next policy meeting scheduled for early February.
Shipping analytics firms report unusual activity in global crude trade routes, with VLCC spot rates climbing nearly 15% since the new sanctions announcement. This comes as European refiners accelerate efforts to replace Russian feedstock with Middle Eastern and Atlantic Basin crudes, creating temporary logistical bottlenecks.